* FTSE 100 index rises 0.9 percent
* Hits 14-1/2-year high after Ukraine ceasefire news
* Ashtead up after raising guidance
By Atul Prakash
LONDON, Sept 3 Britain's top share index touched
a 14-1/2-year high on Wednesday on news of agreement between
Ukraine and Russia on how to move towards peace in eastern
Ukraine and on upbeat UK services sector data.
The FTSE 100 index rose to 6,898.62 points, its
highest level in more than 14 years, after Ukrainian President
Petro Poroshenko's press office said in a statement that
Poroshenko had reached agreement with Russia's President
Vladimir Putin on a "permanent ceasefire" in eastern Ukraine's
Russia later tempered that view, saying Putin and Poroshenko
had agreed on steps towards peace in eastern Ukraine but a
ceasefire had not been agreed because Russia is not a party to
the conflict, according to Russian news agency RIA.
The FTSE, however, was still up 0.8 percent at 6,883.42
points by 0912 GMT.
"It's favourable for the market. It reduces some uncertainty
and suggests that investors will have one less tail risk to deal
with. It doesn't mean that the Ukraine crisis is over, but it is
a step in the right direction," James Butterfill, global equity
strategist at Coutts, said.
"It comes at a time when European economies are showing
signs of a decline. The ceasefire news could help boost business
Data showing Britain's services industry expanded last month
at the fastest pace in nearly a year also lifted sentiment.
"We are getting a pop (in markets) but I would be very
cautious because we have seen ceasefires before," Michael
Hewson, analyst at CMC Markets, said.
Investors awaited the European Central Bank's policy meeting
on Thursday for hints about the market's direction.
Comments by ECB President Mario Draghi in late August
sparked market bets that the central bank is preparing to pump
more liquidity into the system to boost the economy and stave
off the risk of deflation. However, sources from within the
central bank said last week that new action at the meeting was
unlikely but not impossible.
While many market participants do not expect the ECB to take
major easing steps this week, further measures are considered a
matter of 'when' and not 'if' in the face of risks to euro zone
growth posed by low inflation as well as the Ukraine conflict.
"It needs to be seen if recent gains will be sustained and
are based on new 'long-term' buyers entering the market or if
they have merely been the result of short-covering ahead of the
ECB meeting," Markus Huber, analyst at Peregrine & Black, said.
Among individual sharp movers, industrial equipment hire
group Ashtead rose 3 percent after raising its full-year
guidance following a 33 percent rise in first-quarter pretax
profits on strong demand from the United States and Britain.
"Summer has clearly been good for Ashtead, giving enough
confidence to increase forecasts this early being a very good
sign," Paul Jones, analyst at Panmure Gordon, said.
"With most of the progress coming as a result of additional
fleet, we expect future yield improvements to drive growth even
further as market recovery continues."
(Editing by Susan Fenton)